Normal price governs excise valuation for captive clearances; special contract price to one buyer cannot replace wholesale factory-gate value.

For captive clearances of caustic soda to a sister concern, the normal assessable value was the general wholesale factory-gate price charged to independent buyers, not a specially negotiated contract price for a particular buyer. Where different price lists existed and most sales were made in the ordinary course to unrelated wholesale buyers, that factory-gate price was the more representative normal price under the central excise valuation scheme. The contract price for captive use could not replace the general price, so the duty demand was unsustainable and the impugned order was set aside with consequential relief.

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Issues: Whether, for clearances of caustic soda to a sister concern for captive use, the assessable value was to be determined on the basis of the general wholesale factory-gate price or the higher contract price charged to a particular buyer, and whether the resultant demand was sustainable.

Analysis: The record showed that the assessee had declared different price lists for different classes of buyers and that major sales were made to independent wholesale buyers at the factory-gate price. For goods not sold in the ordinary course to the captive unit, the relevant basis was the normal price under Section 4(1)(a) of the Central Excise Act, 1944, namely the price at which goods are ordinarily sold in wholesale trade to unrelated buyers. The reasoning also drew support from the scheme of wholesale trade under Section 4(4)(e) and the valuation principle that, where comparable goods are relied upon, the general factory-gate price is more representative than a specially negotiated contract price for a particular buyer.

Conclusion: The contract price could not be adopted for the captive clearances, the assessee had adopted the correct assessable value, and the duty demand was not sustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: For valuation under the central excise scheme, the general wholesale factory-gate price to independent buyers constitutes the normal price, and a specially negotiated contract price for a particular buyer cannot be substituted for captive clearances where that general price is available and more representative.

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